The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1887-05-19
GOULD'S UNIONPACIFIC DEAL
Jay Says He Once offered to Pay the Gov
ernment's Claim Against the Road.
lie Denies that He Made Anything by the Con-
solidation, and Says If $1.600.000 We're
Bagged the Lawyers Must Have Got 1t.


Jay Gould resumed the witness stand and his
examination continued. He presented a
statement of his dealings in the securities Of the
Union Pacific and Kansas Pacific railroads from
Jan. 1, 1880, to Jan. "a; also. detailed state
ment showing the saving in principal and inter
est, by the consolidated mortgage arrangement,
well as q schedule of his dealings in Kansas
Pacific securities
Commissioner Anderson desired to know why
it was more to the ad vantage OF the consolidated
company to have the Kansas Pacific redeem the
Denver Pacific. bonds instead of the consolidated
mortgage.
Mr. Gould said the consolidated company
would not make new bonds and throw them into
an outside trust, and the scheme which was
agreed upon the only one that could have
been made to the benefit OF the company. Not
individual made cent out of this transac-
ton of the Denver Pacific stock, and am very
glad of an opportunity to put a final nail in that
coffin. ''The giving of the consolidated stock
to the trustees" said Mr.. Gould, would not
have been so good arrangement It would
have been a voluntary and unnecessary addition
to the sinking fund.- and would have been
pledged for the payment of bonds BY the re-
lease of the Denver Pacific stock from the trust
the consolidated company was able TO use 1t In
1t was used for that purpose. and those branches
were bought of according to prior agree
ment The Missouri Pacific. as L bought II.
connected St Louis and Kansas City with 1t
acquired two little lines, which gave me con-
necIion with Atchison."
Mr.. Gould exhibited two maps. showing the
Missouri Pacific as he purchased it. a little more
than 200 miles long. and of the system as 1t now
is, over 1000 miles in extent This extension
the result of the turning over or my land
after discovering the immense capabilities OIL the
associates
the Union Pacific became alarmed within
month after my Missouri Pacific purchase. and
came on bind to the consolidation. L
signed the paper agreeing to it between the time
of my resignation director of the Union Pa
cifc Jan. 10. 1880, and the instruction to the at
torney to prepare the papers for the consollda-
ton presume this paper IS on hle IN the Bos-
ton office. though it was not official account or
the company, but simply preliminary step to
great transaction"
Mr. Gould did not remember the date of the
paper. but stated tho date is in existence, and
will be presented to the commission at Boston.
It is dated Jan. H. 1880. Mr.. Gould continued:
II had been committed to the consolidation
before this interview with the Boston people,
and after my acquisition of the Missouri Pacific
I felt as though IL would be great detriment to
my interests An extension of the Missouri Pa
cifc to Denver and San Francisco. as l contem-
plated, would have destroyed the Union Pacific.
| do not think it would have been the proper
thing for the director of one corporation to de-
sign the extension of another liEe which would
ruin the one of which he was director pur-
chased the Missouri Pacific of Commodore Gar
rison on his offer to sell. l had stormy inter-
view with him in which told him would extend
the Kansas Pacific far east as he did the
Missouri Pacific west. He sold at $3.50 per
share. / have thou zht of the rights of The gov
eminent often. but after the passage or the
Thurman bill. and its sustaining by the Supreme
Court thought the government was trying to
squeeze more out of the turuip than there was In
it. and my plan then was to build road from
Omaha to Ogden, Just outside the right OF way,
for SIS, O0O, 900. With reference TO the govern
ment's claim. / made offer before the judi
ciary committee Of the Senate to pay the entire
claim in cash at its present worth. think 1t
was at that time, 1877 or 1873 some where from
$4,000. 900 to $1,000 000 Mr.. Sidney Dillon
was with me when the offer was made.
MIR. Anderson questioned that such an offer
was made, the commission had been unable
to find record o. t.
but it was IN de and made it" replied Mr.
Gould; mo action was taken on the proposition.
The committee claimed that our computation
was incorrect-that the interest did not mature
with the bond. This was decided In 1876 but
think it was in the power of Congress to provide
for maturity at earlier date. At the time of
the consolidation meeting was at my Office in
the same building. the same floor. There
were connecting doors between my Office and the
Offices of the company. / have no specific rec
objection of seeing the articles OF consolidation
that day, the gentlemen present at the meet
ing 1t would have been natural for Judge Dill
Ion to call on me that day, but l don't know
whether he did or not. signed my resignation
as director in my Office. l think wrote it, but
the paper will show for itself l presume 1 con-
suited with Sidney Dillon and Judge Dillon with
reference to it. knew it was not proper for
me to remain director while I was dealing
with the company. l presume l handed it
into the Office of the company, possibly to Presi-
dent Sidney Dillon. He expressed no surprise,
for he knew that if the consolidation was effect
ed it would necessarily involve large transactions
with me. individual. Before my resigna-
ton no bargain was made with me regarding st.
Joseph e. Western, the other branch roads.
The basis of the consolidation had been discussed
several times before, and it was known that |
mnst resign. Mr. Sage probably knew was to
11yaIv a1yv vii hIsy,r
garding all the steps leading up to the consoli-
daton. 1 know nothing of the action of the
board with reference to the acceptance of my
resignation. l made no request concerning it,
for it was a completed transaction soon
fled Jan 10. / don't think | knew that Dodge
and Humphreys report was to be presented to
the board of directors. That report was directed
to myself and others, think. as directors, andI
was not director at that time, and was not fur
at the meeting of the directors of the
new company, Jan. o. 1880. I moved to
ratify the action of the consolidation, and must
have informed myself of the action at the meet
ing of the oath l prepared my resignation as a
director of the Kansas Pacific at the same time
with that of the Union Pacific. WANTED to be
free from the complications of dictatorship and
trusteeship to complete the dealings. never
requested Russell Sage to move the acceptance
of my resignation. Mr.. Sage is man whose
time is valuable. and who to hurry matters, IS
always ready to move a question. l think that
the paper of Jan. a. which bound me to the
consolidation, was in the nature of an agree
Tnent with the Kansas Pacific"
The witness was examined at length concern
ing the branch-road securities which he turned
in for the consolidation stock. 81 bought stock
and bonds of the Kansas Central from Commo-
dore Garrison at the time purchased the Mis-
souri, Pacific. paying therefor S431 500 For
these securities / received $4,000 of Union
Pacific stock. paid for l 900 shares of the Ar
rapahoe county bonds and received $50, 800
Union Pacific stock and $13500 Kansas Pacific
stock. just what paid for it"
In purchasing the central branch OF the Union |
Pacific, MIR. Gould told of the he fooled |
by Oliver Ames and President Pomeroy, of the |
road. He was building the Junction City g. /
Fort Kearney road, parallel to the central |
branch, and Ames and Pomeroy came on to New |
York TO see him and sell him the road. They |
took Mr.. Gould back with them to show him
over the road, and he said he very much i'm
pressed with the amount of business being trans
acted. AT every station they passed long freight
trains were continually side-tracked to allow